This news seems to have been priced in following cautious channel checks that were published early last week. YUM shares have been range bound for the past 4-5 months as investors have been willing to give the company “a pass” on soft monthly comps and share management’s confidence that China comps will turn positive in 4Q and recover strongly in 2014.

But six months of consecutive decline are hard to swallow. Here is Rachel Rothman of SIG Susquehanna Financial Group:

Management attributed the still weak SSS to the December 2012 poultry supplier issue, which we find surprising since management had previously alluded to an ongoing recovery from the incident as of 1Q13. We find it surprising for the overhang to persist eight months after the event, which would be the longest it has taken to recover from such an incident. We are more inclined to attribute the SSS weakness to a weak consumer (in line with slowing China macro driven by government austerity measures), or an overbuilding problem – neither of which management has acknowledged. YUM maintained its expectation for SSS to turn positive by 4Q.

Investors are patient and giving Yum! a second chance because they have been rewarded handsomely. In the last decade, Yum! returned 17% a year, far outpacing S&P 500′s 5%.

Some analysts are giving Yum! the benefit of the doubt too. Oppenheimer analysts Brian Bittner and Michael Tamas maintain a Buy on Yum!, saying it has the potential to perform:

Management maintained its view of positive 4Q comps (September-December), which suggests September is off to a decent start. We believe easing comparisons, bottoms-up investments and “time” will drive an impressive sales recovery.

Maintain Outperform and $80 price target. The ride to recovery has been bumpy, but we believe those who stay on, or jump on will be nicely rewarded. The Street will soon turn its focus to ’14 and ’15 EPS power, which we believe could make a case for a stock price above our price target.

We can debate on whether and when Yum! can pick up sales again, but as far as the consensus goes right now, it is an expensive stock. Yum! trades at 1.8 times PEG, above its 5-year average of 1.4 times or the industry average of 1.2 times, according to data provided by Factset. Yum trades at the same level of McDonald’s (MCD), a more diversified and larger fast-food chain.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.